Genesis HealthCare will institute a three-part plan to improve its financial metrics and cut debt by $236 million, the company announced Wednesday. The plan includes a voluntary delisting from the New York Stock Exchange by March 25.
As part of its restructuring effort, the Kennett Square, PA-based skilled nursing operator has agreed to terminate its master lease covering 51 facilities leased from affiliates of Welltower and transition operations to new operators. Genesis announced the news the morning after Welltower revealed an $880 million deal that will see the real estate investment trust largely exit its real estate relationship with Genesis.
In return, Genesis will receive approximately $86 million, which it will use to repay a portion of its debt obligations to Welltower. In addition, Genesis will receive an additional $170 million in debt reduction from Welltower upon the transition of the 51 facilities.
Genesis also signed a definitive agreement for a capital infusion of $50 million from ReGen Healthcare, which ups its ownership interest in Genesis to 25%. ReGen Healthcare also has the option to make an additional debt investment of $25 million exercisable no later than March 31 and to be funded by April 15. ReGen Healthcare has a track record of creating and turning around healthcare delivery companies, Genesis said in a statement.
Also as part of the agreement, two Genesis board members, John F. DePodesta and Terry Rappuhn, have relinquished their current positions and ReGen Healthcare has appointed David Harrington and John Randazzo, effective immediately. In addition, Harrington has been appointed chairman of the board.
“The severity of the pandemic dramatically impacted patient admissions, revenues and costs, compounding the pressures of our long-term, lease-related debt obligations,” Genesis HealthCare CEO Robert Fish said in a statement. “These restructuring transactions improve the financial and operational stability of the company significantly and build on the encouraging signs we are seeing as COVID-19 case rates continue to materially decline and residents, patients and staff are vaccinated.”
Genesis shares dropped 38% to 50 cents, and Welltower stock increased 0.58% to $69.02 at market close Wednesday.
This article appeared in the McKnight’s Business Daily, a joint effort of McKnight’s Senior Living and McKnight’s Long-Term Care News.
